Activity Based Budgeting
Overview of ABB
Activity Based Budgeting (ABB) is a method of budgeting designed to provide greater transparency into the budget process. In its most basic form, ABB is a method of budgeting in which revenues generated from instructional and research activities are allocated directly to the unit responsible for the activity. ABB 'empowers' greater local planning and accountability and creates incentives for units to more efficiently manage resources and expenditures. Further, direct control of resources generated from activities creates incentives to set priorities and develop new activities consistent with the overall mission and strategic goals of the institution.
The University of Washington fully implemented an ABB system at the beginning of the 2013 fiscal year. This brief from 2012 provides an overview of ABB implementation. The ABB report here includes individual decision summaries which were submitted to the President and Provost in October 2011.
Components of ABB
ABB Tuition Calculation and Distribution
The following resources provide an overview of ABB tuition revenue distribution including fiscal information and modeling:
- An Intro to ABB Tuition for Unit Administrators provides a more detailed explanation for those who need to understand more about the details of the process.
- ABB Tuition Revenue Distribution Manual provides a detailed, technical explanation of how tuition revenue is projected and how the distribution calculations are made.
- ABB Tuition Distribution Model provides unit-level detail for FY12 through FY16. The "Reference"tab provides an explanation to help the user understand the meaning of the many tabs. The file includes tabs showing projected tuition revenue, actual net operating tuition revenue, and detailed calculations of the distribution of tuition revenue to schools and colleges for each fiscal year since FY12. The file also includes calculations of the "true-up" and incremental tuition revenue. The summary tab shows the projected and actual distributions for each year.
- ABB Budget Allocation provides ABB budget detail by unit for FY13 through FY16. This document includes details of Tuition, ICR, Miscellaneous Fees and supplemental components that comprise the total ABB budget allocation.
- FY12 Setting the Baseline includes Regents' fiscal information and baseline distributions to schools and colleges.
- ABB Tuition Projection Model allows the user to manipulate tuition and salary levels.
ABB Review Committee
When ABB was adopted in 2012, a commitment was made to leave the basic elements in place for five years to provide an opportunity to understand the consequences of ABB as it was initially structured. In the meantime, an ABB review committee was formed to monitor and review the current model and to provide recommendations about possible changes that might be considered. The recommendations provided by the committee were taken into consideration by the Provost and the President and in July 2015, faculty committees were charged with investigating four areas of academic life that are imperfectly addressed by the current budget model. Committee charge letters and their final reports are available below:
- The Faculty Council on Academic Standards reviewed educational collaboration, with a focus on joint courses/degrees and new academic initiatives. The final report is available here for review.
- The Faculty Council on Research considered whether ABB affects collaboration in research. The final report on the effects of ABB on collaborative research is available here for review.
- The Faculty Council on Teaching and Learning investigated the current treatment of summer quarter as an Educational Outreach endeavor and exploring related implications on faculty salaries and research and the final report is available here for review.
- The Graduate School Council discussed cross-college hiring of graduate students and graduate student waivers and the final report is available here for review.
ABB Phase II Process
As noted, a commitment was made to leave the basic ABB elements in place for five years, with the understanding that after five years, there would be a thorough review of ABB as it currently operates.
The FY15 ABB Review Committee held a preliminary meeting in October 2015 to brainstorm a range of topics and scope for the upcoming ABB review.
Now that the ABB committee has received recommendations from the four faculty committees above, the ABB Review Committee is charged with Phase II work. The charge letter is available here for review.
ABB Phase II committee members were grouped into four subcommittees to accomplish the objectives mentioned in the charge letter. The subcommittee's assignments, tasks and timeline details are available here for review.
2015-16 ABB meeting agendas and minutes:
- Oct 27, 2015 - agenda and minutes
- Dec10, 2015 - agenda and minutes
- Jan 14, 2016 - agenda and minutes
- Feb18, 2016 - agenda and minutes,
- Mar 09,2016 - agenda and minutes
- April 13,2016 - agenda
- May 26,2016 - agenda
ABB Survey Responses
ABB committee members suggested that deans, administrators and faculty leaders receive a survey to provide feedback about ABB and make suggestions as to the scope of the Phase II committee work. The survey was released in early January, 2016 and the results of the survey are available here for review.
ABB Phase II Update for BODC
On Apr 06,2016, OPB met the Board of Deans and Chancellors (BODC) to provide an update on Phase II work in progress of the ABB committee and shared their findings and initial recommentations on the tasks assigned to them. Please see below for the materials that were shared at the meeting.
- Phase II Update for BODC
- Summary of instructor of record vs course of record
- Tuition distribution scenario's
ABB Phase II Report
Following a comment period for faculty, deans, staff, and students to review a draft report, the Activity Based Budgeting (ABB) Phase II Committee released a final report, which includes recommendations for improving the ABB model. The report was sent to the Provost in July, and any changes to the ABB model will be announced in the fall and take effect in FY18.
ABB Concerns, Questions, & Suggestions?
Submit a form, if you have any concerns about the nuances of the ABB methodology or suggestions to change the model. If you have a question that OPB can answer, a response will be sent to the email address provided. If your issue needs to be addressed by the ABB Review Committee, you will receive a notification when it is added to one of their meeting agendas.
ABB Reports and Resources: The ABB Steering Committee provided recommendation for the adoption and implementation of the ABB model. Below are the materials from that implementation phase, along with more recent materials (an audit from 2014 and a 2015 summary, for background information).
Peer Institutions : Other Universities have implemented a similar budget structure. Below are the links to their budget models:
- UW Budget
- Tuition & Fees
- UW Data
- State Operations
- About OPB